Starting and running a business takes huge effort and commitment. But smart entrepreneurs know their work isn’t done once the company succeeds. Planning for your own future outside the business is just as crucial as starting the business. As a business owner, it’s helpful to ask yourself four key questions to begin to define what your ideal next chapter looks like.
What Does Financial Independence Look Like?
Determine the annual income you need to maintain your lifestyle. This will look different for everyone. Do you love taking luxury trips? Cruises? Or maybe there are causes you want to be able to continue to support. Consider all these things and take time to calculate your ideal annual income based on current and future lifestyle expenses. This will give you a target amount to help make smart business decisions now. With a number in mind, you can better evaluate sale offers or set company profit goals. Revisit this yearly as your needs evolve.
Who Do I Want to Sell To?
Decide if passing your business to a partner, employee or family member aligns with your vision. Groom suitable successors well in advance. If there’s no one immediately around you to take over, it’s time to broaden your consideration. Is a strategic buyer who can grow the company an option? Perhaps selling to a competitor is the best course of action. Knowing your preferences help shape your exit strategy planning, vet potential internal and external successors and make difficult decisions about the Company’s future before they are asked.
How Can I Minimize Taxes?
The Devil is in the details and you need to be as well. Structure the eventual sale or transfer to minimize tax burdens. There are many different methods available if you start early and don’t wait till the last minute to implement tax-saving strategies. For example, gifting partial ownership or selling in installments over time could save substantially versus a lump cash payout. Or perhaps you make look into establishing trusts or other entities to legally shield assets before any sale. Remember to consult experts like CPAs or tax attorneys whenever you’re uncertain or an expert is needed.
What Are My Goals Beyond Work?
Reflect on how you want to spend your time and what makes you fulfilled outside of work. Do you want to get involved in philanthropy? Travel? Launch new ventures? Mentor students? Planning for your future always starts with self-discovery. Envision your ideal retired lifestyle and what new pursuits excite you most post-business.
The bottom line is this: asking the right questions now allows you to proactively build the life you want after your business. With forethought and dedication, you can set yourself up for an exciting and fulfilling future. We’re here to help however we can! Reach out for a free consultation and lets see how we can work together towards achieving your goals.
